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Other names for an Independent Contractor Agreement
Independent Contractor Contract, Freelancer Contractor Agreement, Contract Labor Form
An Independent Contractor Agreement isn’t for employees
It’s important to note up front: there’s a big difference, both legally and logistically, between a contractor and an employee. You should only use an independent contractor agreement for workers who are classified as contractors. They’ll have more autonomy over how they do their work, but you’ll also have less responsibilities to them than you would a full-fledged employee.
Do you need an employee or a contractor?
Sometimes, the difference between a contractor and an employee is obvious. Someone that comes into your house and remodels your kitchen? That’s a contractor. Someone else who sold you coffee this morning? That’s an employee.
But what if you were hiring someone to do some writing for your startup? What if that person works outside your office? What if you don’t have an office in the first place? What if you, as the employer, provides all the necessary materials to complete the job? And what if that person wants to come to the company holiday party?
The answer is: it depends. There’s no magic bullet for who classifies as a contractor or employee, but there are certain characteristics to keep in mind. We'll discuss those below.
There are advantages and disadvantages to both classifications, however. Remember, no matter whether you want to hire a contractor or employee, you’ll want to put it in writing with an employee agreement or Independent Contractor Agreement.
Characteristics of an employee (i.e. when not to use an Independent Contractor Agreement)
When hiring, ask yourself: will I be able to control when this person comes and goes (such as their hours and vacation time)? Will I have final say in what they’ll be doing and how they’ll be doing it? Will this person be hired for a non-specified time? Will I be giving them the supplies they need to do their job?
If you answered yes to these questions, odds are, you’re talking about an employee.
Employees are generally given less independence than contractors. To use our examples above, you wouldn’t very well tell a cabinet maker which tools to use or when he could take his lunch. On the flip side, if you owned a coffee shop, you’d be providing your worker with the tools they needed (coffee, milk, an espresso machine) and that person would have shifts.
When you’re hiring an employee, it’s a great idea to have them sign an employee offer and agreement. While you don’t have to be hyper-specific in your agreement (for example, you don’t have to tell your new worker what color pen to use or anything), but you should lay out the role your new employee will have, if there’s a probationary period, and, of course, the offer.
Characteristics of a contractor
Contractors have a lot more autonomy. Often times, people like dentists, accountants, and handymen are contractors and generally, if you’re hiring a contractor, that means you have control over only the final outcome, not how the job will be done.
Let’s go back to our cabinet maker example. Since you’d likely hire this person to simply make you a cabinet (and not, say, micromanage the tools, stains, and processes he’d be using), he’d be a contractor. This is because you control the outcome, namely, you’re paying for a cabinet to be made.
And although some contractors can be hired on a more ongoing basis, quite often they’re hired for a single job. In our example, it’s building a cabinet, but you could also hire a contractor to write you a press release, test the beta version of your new website, or redecorate your business.
If you’re thinking about hiring a contractor, it’s a good idea to use our Independent Contractor Agreement. In it, you can specify the terms of the job, the payment structure, and estimate the amount of time the job will take and much more. And it only takes about 10 minutes to complete.
Other documents for you and your business:
If you're using an Independent Contractor Agreement, chances are you might need one of the following:
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